Crafting Finance is a synthetic asset issuance protocol and contract trading platform based on the Polkadot contract chain. It uses DOT, KSM, BTC, ETH and the CRF issued by the project as collateral, and synthesizes any cryptocurrency or off-chain assets such as stock, bonds and gold through smart contracts and oracles.

Users can forge a certain synthetic asset,as we call RAFTs, such as U.S. dollars, by collateralizing DOT, KSM, BTC, ETH or CRF, which automatically becomes a long position in the asset. Users can also convert minted assets into other assets through the trading platform, so as to achieve the purpose of shorting the asset and longing other assets. The assets minted by users are the liabilities corresponding to the entire system. The proportion of each user’s liabilities has been determined at the time of collateral, so that their respective profits can be calculated. Because such a collateral pool model does not require a counterparty, it perfectly solves the problems of liquidity and transaction depth in DEX.

The main functional modules of the entire system include: forging synthetic assets(Forge), decentralized exchange (Kingsman), collateral pools, fee pools, oracles, and Polkadot bridge.

Forging Synthetic Assets(Forge)

The synthetic assets issued by the entire system are all produced by users staking certain collateral. The initial collateral includes CRF, DOT, KSM, BTC and ETH, and the collateralization ratio depends on the variation of the collateral itself. In the future, the collateral and collateralization ratio can be adjusted through community governance. When users stake collaterals and forge synthetic assets, corresponding debts are generated. When the user wants to unlock the collateral, he must repay the debt, that is, destroy the previously generated synthetic assets.

RAFTs

At present, RAFTs (assets synthesized by direct staking of collaterals) can be fitted in to four different categories: stablecoins (RaftStable), simple synthetic assets (Raft), custom synthetic assets (UnivRaft), and synthetic bonds (BondRaft).

Stablecoins (RaftStable)

Stablecoins are a very important part of synthetic assets, such as rUSD and rEuro which can be used as denomination currency in the whole system as well as contract trading. Furthermore, stablecoins can also be used as collateral lending. Users can borrow stablecoins such as rUSD and exchange it into real world dollars.

Simple synthetic assets (Raft)

Simple synthetic assets can be cryptocurrencies such as rBTC and rETH, stocks such as rAAPL, gold such as rXAU and any real world assets.

Custom synthetic assets (UnivRaft)

Custom synthetic assets means that users can issue any kind of a financial contract through this system. By this way, we can stimulate any financial derivatives and include the whole world’s assets.

Synthetic bonds (BondRaft)

Synthetic bonds are synthetic assets paying interest issued by the system.

DEX (Kingsman)

It is an exchange that provides conversion of different synthetic assets and contract trading. Due to the design characteristics of CF, this DEX does not require a counterparty, and there is no issue of transaction depth.

Other components

Collateral Pool

The collateral pool is the sum of synthetic assets generated by all users. According to the amounts of synthetic assets generated by each user, the debt pool also records the proportion of each user’s debt. Whenever a new synthetic asset is generated, the debt ratio of the system must be recalculated.

Fee Pool

Users trading or converting synthetic assets on the DEX will incur transaction fees. The fee ratio is tentatively set at 0.3%, and these fees all enter the fee pool. The fee is collected in rUSD, and all the fees are distributed to users in proportion to the debt. The system stipulates that only users whose collateral is the CRF can receive rewards, as an incentive for CRF holders. Because the CRF price fluctuates, it is stipulated that only users who meet the collateralization ratio are eligible to receive rewards.

Oracle

Since the price of contract trading needs to be read from outside sources, the oracle is a very critical part of this project. In the initial stage, the system will use the centralized oracles provided by the project team, and in the future, it will introduce more secure decentralized oracles.

Goal

This project will realize a decentralized virtual asset issuance platform and contract trading platform, which can not only replace the perpetual/futures contract functions of major centralized exchanges in the long term, but can even achieve the issuance of any type of assets on the protocol to have a role to play in the traditional financial market.

Advantage

Centralized contract exchanges have exposed more and more problems, and the entire industry needs a solution for decentralized contract exchanges. The project’s decentralized contract trading solution not only has the characteristics of general DEX openness and transparency, anti-censorship, and does not require KYC, but also because there is no counterparty in the project, it perfectly solves the problems of general DEX transaction depth and liquidity. Therefore, we believe that the prospect of this project is very broad and it is a real DEX solution.

Crafting Finance CRF

Historical Data for Crafting Finance